'Complete Catastrophe': Economist Says U.S. Losing The War And Going Broke | Steve Hanke

Summary

• Steve Hanke argues Iran is winning the war against the US/Israel, primarily by maintaining functional control of the Strait of Hormuz, which acts as a strategic choke point causing "tremendous damage" to Western economies.
• He presents contrarian data: Iranian rial has appreciated 6% since the war started; Iranian inflation is down from >80% to 67% per year; and Iran is exporting more oil at higher prices with lower discounts than before the war.
• The US is "insolvent" based on its own financials: $6T in assets vs. $47.78T in liabilities as of Sept 2025, plus $88T+ in off-balance-sheet liabilities for Social Security/Medicare, calling it a "complete catastrophe" that is deteriorating rapidly.
• Oil prices are poised to rise significantly because physical market prices are far above futures/paper market prices; the futures market will be "mugged by reality" and catch up to the physical price.
• He remains long-term bullish on gold, maintaining a cycle top target range of $6,000-$7,000/oz, though acknowledges recent headwinds from higher bond yields (opportunity cost) and a stronger dollar.
• A US ground invasion of Iran would be a disastrous "Hail Mary pass" with almost zero chance of success against ~1 million Iranian troops, likely becoming a "bloodbath."
• Russia is a major beneficiary ("tremendous winner") as it produces and can export oil, fertilizer, and helium—commodities bottlenecked by the Gulf conflict—and may use them as leverage to get sanctions removed.
• He forcefully rejects the historical narrative that WWII ended the Great Depression or that wars are economically stimulative, calling it false and noting the US was already recovering pre-war and boomed post-war.